DuPont and Genencor Join for Cellulosic Fuel

If the market opportunity for non-food cellulosic biofuels is really in the tens of billions it’s no surprise that increasingly bigger companies are coming to play where the startups have been working. Today, DuPont and Genencor, a division of Danisco A/S, have announced the formation of a joint venture to develop and commercialize cellulosic ethanol production from non-food feedstocks. The JV, uncreatively named DuPont Danisco Cellulosic Ethanol LLC, will be split 50/50 between the two companies who plan to invest an initial $140 million ($70 million each) over the next three years.

DuPont and Danisco have laid out an ambitious time line for their business. The JV plans to have its first pilot plant online by 2009 and its first full-scale commercial demonstration plant operational by 2012. The company says it will license its cellulosic production package as a “bolt-on” to existing ethanol production facilities but said it could also invest and own ethanol refineries. On a conference call today with investors, DuPont Chairman and CEO Charles O. Holliday, Jr. said he recognized that there are many other players in the space but claimed: “We’re gonna be the winner with the lowest cost. Ethanol is a commodity and the secret is the lowest cost.”

This places the two huge chemical firms in competition with cellulosic fuel startups like Coskata and Mascoma whose value is mainly in their IP, both of whom have said they consider licensing to a be a viable business strategy down the line.

The joint venture will use DuPont’s proprietary pretreatment and ethanologen technologies and Genencor’s enzymatic hydrolysis methods. Initially, the JV will target corn stover and sugar cane bagasse as feedstocks. The company stressed that the global scope of the market opportunity and the specific initial inclusion of bagasse likely means that the JV will be seeking to tap into Brazil’s huge ethanol industry as well as the much more immature U.S. corn-based fuel industry.

While Mascoma and Coskata are both backed by General Motors, both firms insist that there is plenty of space in non-food biofuels for a number of players. However, Dupont Danisco, with its considerable investment and years of biofuel research could considerably raise the stakes of scaling licensed cellulosic ethanol technology globally. “We are convinced we will have the lowest cost in a very aggressive time frame,” Holliday added this morning.